Reagan's Regulatory Reform

Getting a grip on runaway federal regulation was one of Ronald Reagan's many significant achievements as president. But media tributes since his death have scarcely mentioned President Reagan's efforts at regulatory reform.

President Reagan wasn't the first president to try to make sure federal regulations were based on sound science and economics. But his administration was the first to make regulatory reform a priority. During the 1960s and 1970s, Congress sought to remedy a host of newly perceived health, safety and environmental problems by enacting a flood of legislation to be implemented by federal agencies such as the Environmental Protection Agency, Occupational Safety and Health Administration, Food and Drug Administration and the Consumer Product Safety Commission. This alphabet soup of agencies implemented these laws by issuing a flood of costly regulations often with dubious benefits.

The White House Office of Management and Budget once estimated, for example, that the EPA's regulation of pentachorophenol (search), a wood preservative used on telephone poles, might prevent a single death from cancer but at a cost of $5 trillion!

President's Nixon, Ford and Carter made slight and tentative efforts to bring the regulatory process under control, but it was President Reagan who intensified presidential involvement in the regulatory process. Shortly after his inauguration, President Reagan issued Executive Order No. 12291 that established a process whereby proposed federal regulations with an annual effect on the economy of $100 million or more would be reviewed by OMB for potential costs, potential benefits, net benefits and other less costly alternatives.

President Reagan later issued Executive Order No. 12498, requiring federal regulations seeking to reduce health and safety risks to be based upon scientific risk assessment procedures and to address risks that are "real and significant" rather than "remote and hypothetical."

The Reagan policy directives were disliked by the federal agencies and detested by environmental and Nader-ite activist groups who saw them as a roadblock to new regulation.

Emphasis on risk assessment and cost-benefit analysis were so successful in reducing the flow of costly and burdensome EPA regulations on air quality that activists were forced to lobby Congress to re-write the Clean Air Act (search) so that science and economics were not at all to be considered by the EPA when issuing regulations. Recognizing the often costly but not commensurately beneficial nature of federal regulations, President George H.W. Bush increased the scrutiny of proposed federal regulations by creating The White House Council on Competitveness (search) to be the regulatory traffic cop — further frustrating the environmentalists and Nader-ites.

The election of President Cinton, however, brought regulatory reform and review to a screeching halt. President Clinton abolished the Council on Competitiveness and revoked the Reagan Executive orders. Although President Clinton subsequently issued his own Executive order ostensibly requiring review of regulations with economic impacts exceeding $100 million, no serious effort was made to implement the policy— resulting in eight years of uncontrolled regulatory agency activity, most notably the EPA.

Following the 1995 takeover of Congress by Republican House and Senate majorities, legislation was introduced to make science-based risk assessment and cost-benefit analysis the law — a move considered a necessary step since President Clinton wasn't enforcing his own executive order on regulatory review. The Newt Gingrich-led Republican effort on regulatory reform— part of the so-called "Contract with America" (search)— failed due to weak congressional leadership and successful fearmongering by the Clinton administration and environmental activists. Activists absurdly claimed that mandatory risk assessments was tantamount to rolling back health and environmental protections 25 years.

In 1997, the newly emboldened Clinton EPA subsequently issued the most costly regulations ever — air pollution rules estimated to cost more than $100 billion annually — without any outside independent scrutiny of the agency's supporting analysis. The rogue EPA even refused to satisfy a Congressional request for the data underlying the EPA's analysis. Sadly, "regulatory reform" and "regulatory review" are not terms often heard in Washington, D.C. today, even with a Republican president and Republican-led Congress who revere the memory of Ronald Reagan.

Yet President Reagan's view that federal regulations should be based on sound science and sound economics is very much part of today's debates over health, safety and environmental policies — the U.S. will not participate in the global warming treaty known as the Kyoto protocol (search) because the hypothetical benefits of reducing greenhouse gas emissions pale in comparison to their very real and significant costs. It's a Reagan legacy that ranks right up there with winning the Cold War, reducing taxes and restoring America's confidence.